The Institutionalisation of Hollywood

The production of TV and Film around the world faces exactly the same mass media economic problem.

The current model is simple. Studios take the risk. They scout for and fund the investment and reap the majority of the reward through distribution. The talent is paid a little, with a select few receiving much, much more than others. Basically though, the Studio owns it all.

Off the back of the WGA strike, talent is looking at new ways to create content and keep most of the ownership.

“Virtual Artists will offer professional writers deals to develop and produce films, TV shows and shorts for a reduced fee but a larger ownership stake. It will also look to acquire content.”

This is one example of many groups of talent coming together to seek VC investment; Virtual Artists, Hollywood Disrupted and 60 Frames.

The problem is that these new firms are simply replicating the same mass media economic model, the model they have been institutionalised into. If you think about it, these new firms are simply playing the role of the Studio, but on a smaller scale. They face the same transaction costs to find talent and create new programming that the studios do.

My question. When these new ventures grow, will the TV/Film world look any different? The economics are exactly the same, just spread out over more small/niche/focussed Studios. A bigger pack of wolves, different clothing.

Right now, their offering is to ask the talent to take the risk (reduced fees) and in reward be given a larger share of revenues. Who’s the real winner here?

The new wolves…, and they will have the same problems the studios face. They will not be able to scale investment, production and output. They will have to control tightly what is invested in and what isn’t. They will become the new bottlenecks for talent.